Good morning from the Financial Times.
Today is Thursday, November 13th, and this is your FT News Briefing.
Looks like the longest government shutdown in American history is over, and kilts could soon replace gilts in Scotland.
You heard that right.
Plus, wealthy people from China are sidestepping Singapore for Dubai.
I'm Mark Filippino, and here's the news you need to start your day.
Congress agreed last night to end the U.S. government shutdown.
The House of Representatives passed the bill to reopen the government by a 13-vote margin.
At the time of this recording, U.S.
President Donald Trump is expected to sign the bill late on Wednesday night.
But we may have to do this whole thing again in a couple of months.
The agreement by U.S. lawmakers will only fund the government until the end of January.
As I mentioned before, this was the longest shutdown in American history at 43 days.
Thousands of federal workers were furloughed and welfare programs were disrupted.
Federal services are expected to reopen in the coming days.
Scotland is one step closer to issuing its first ever investment kilt.
Now, just to be clear, we're not talking about the piece of clothing that kind of looks like a skirt.
These kilts are the country's own bonds, which have been nicknamed kilts.
And these kilts, they might be an early step toward another run at Scottish independence.
The FT Scotland correspondent, Simeon Kerr, joins me now.
Hi, Simeon.
Hi there.
So, Simeon, this seems like a pretty big deal.
What do we know so far about these bonds, these, you know, kilts?
Last night, Moody's and S&P Global awarded the Scottish government investment-grade ratings.
They've given them the same ratings as the UK government.
These...
Credit ratings will provide Scotland with the cover that they need to press ahead with bond issuance.
And so this is an important milestone for Scotland as they push forward with a plan to issue its own bonds, known as kilts, in a reference to UK sovereign debt, which is known as gilts.
So presuming they go ahead with their bond issuance, this will be quite an historic step.
And the last time a Scottish bond was issued.
Issued was in the late 17th century, before Scotland and England joined to become Great Britain in 1707.
Now we should point out that Scotland had not had this kind of rating before, because it's part of the United Kingdom.
Why is Scotland issuing these bonds now?
Well, Scotland's had the power to do so ever since 2015.
And it's something they've been thinking about since then.
The process really sort of gathered steam in 2017
23, never quite got over the line, but now they are going ahead with it.
Now the ostensible reason is that they formed an investor panel to give them advice on how to better tap international finance to fund infrastructure in the country, specifically for transition away from fossil fuels to renewables to help them reach net zero.
And one of the recommendations of that panel was that they should get a credit rating and and issue bonds.
So that's where they are now.
They're pressing ahead with it.
Now, one of the things that I've been murmuring around is that this could be another try at Scottish independence.
Why would these bonds be that gateway?
Well, they've often argued that what this would do is it would help them build credibility with international markets.
And having a conversation with the bond market these days, as governments all around the world are discovering, is one of the most important things that government has to focus on.
The whole prospect of independence isn't really that strong now.
Obviously, the 2014 referendum kept the United Kingdom intact.
But as the SNP government grows, continues to push its case for independence, it knows that it needs to be able to communicate with international investors to show that it's got the credibility that it takes to run a sovereign nation on its own.
So the whole process of going for these bonds will help that push.
What are you looking out for next, simeon?
Do we have a sense of what the demand could be for these bonds?
Because this is sub-sovereign debt.
The Scottish government is part of the UK, but it's not the UK government.
They're going to have to pay a premium to what the UK gilts trade at, because it's a smaller market and there's an additional political risk there.
There does seem to be appetite within the bond community for this.
If they can get the right price, there is quite a lot of appetite for sovereign debt in general.
I think as you go forward...
Scotland having its own bond is going to be interesting because we'll get a sort of insight into how the international investor community feels about the Scottish economy within the UK but also the prospects for independence.
It's going to act as a sort of proxy for that debate, a proxy for the Scottish economy.
All those things are going to make it an interesting bond to follow.
That's the FT Scotland correspondent, Simeon Kerr.
Thanks, Simeon.
Thanks.
There is a devastating chip shortage in Europe right now and it's so bad that officials warn there could be a break in production at carmakers and other industrial companies within a couple of weeks.
The heart of this concern is Nexperia.
The Dutch-based company makes chips that are used in cars and control everything from airbag systems to locks and windows.
The Dutch arm of the chipmaker has a beef with its breakaway Chinese subsidiary, so it isn't sending key components over there.
And that is a problem. because that means they can't get assembled and then re-imported to Europe.
The supply chain breakdown stems from a power struggle for the company.
The Dutch government seized control of Nexperia and forced out the Chinese chief executive last month.
Wealthy Chinese people are skipping Singapore for the Arabian Peninsula.
This past year has seen a rise in China's elite relocating their offices to Dubai and Abu Dhabi.
Owen Walker is the FT Singapore correspondent, and he joins me now to talk about it.
Hey, Owen.
Hey, how's it going?
Yeah, not bad.
Before we get into the Gulf, remind me why more Chinese elites were setting up shop in Singapore in the first place.
There's a sort of broader global trend that's been going on the last five, ten years, which is, the world's richest people are looking to diversify where they store their wealth.
So what we've seen in particular with wealthy Chinese is maybe they initially had their money in family offices based in Hong Kong.
In the past five or six years or so, and certainly post-COVID, we've seen a real interest in them moving some of their money and some of their operations to Singapore.
A lot of the idea here was that if they set up a family office in Singapore and move some of their money here, That would get them on the path to getting permanent residency or potentially even citizenship, which is something that really appeals to them.
Right, and the influx has really petered out over the past couple of years.
Why is that?
So a couple of years ago in Singapore there was a very high-profile money laundering scandal which really ripped through the city-state system.
And it was in connection with at least 10 individuals linked to this Chinese gang who were essentially running illegal betting sites.
Now, a lot of these individuals had set up family offices and they were using the banks in Singapore as a means to launder their money.
So what we've seen really since then has been a bit of a clampdown on who comes into Singapore and who can bring their money with them.
So there are a lot more due diligence checks.
And that's meant that clearly, for legitimate people who've made money in legitimate ways, it just means there's a bit more administration.
But it also means that it's a longer process.
And at the same time, it's being made easier to do similar to set up operations in the UAE.
So, you know, that's really been a feather in the cap for a place like Dubai and Abu Dhabi.
Is there anything else that's really attractive about these places?
Well, in recent years the Gulf Dubai, Abu Dhabi they've really rolled out the red carpet to very wealthy families and individuals from across the world.
Really,
And as part of that, they have introduced these so-called golden visas, which essentially offers residency for up to 10 years to investors and their family members, high-skilled workers.
You know, they issued 80,000 of these golden visas in 2022, up from 47,000 the year before.
And what we're seeing is that Chinese wealthy individuals in particular have really taken up these offers in the past year or so.
So Owen, I guess, is Dubai the new Singapore for at least Chinese elites?
I think what Dubai and Singapore offer are quite different.
Singapore prides itself on being ostensibly a place of, you know, rules-based system.
Rule of law reigns.
So they would see themselves as the natural home for legitimate money.
And you know wealthy people who don't mind the additional checks and balances, because it means it's a kind of a stamp of approval if you have a family office in Singapore.
Dubai is a bit more of an upstart and it's kind of got a reputation for being willing to accept people without as stringent checks.
And so I suppose you'll start to see money flowing that direction.
People who are kind of don't really want to go through the hoops that Singapore is putting up.
Another area is that Dubai is very welcoming to the crypto community, whereas Singapore is more conservative and is kind of probably quite happy to let some of those individuals pass by and head to the Middle East.
Owen Walker is the FT Singapore correspondent.
Thanks so much, Owen.
Thank you.
Penny, for your thoughts on one more story before we go.
This is the last one.
Three, two, one.
That was U.S.
Treasury Secretary Scott Besant at the Philadelphia Mint yesterday, stamping out America's very last penny.
Now, this is a big deal because the coin has been around for 230 years.
Here's the administration's two cents worth on why it wants to go penniless.
The U.S.
Mint will save $56 million a year.
That's because it costs about four cents to make the one cent coin.
Retailers are still making heads or tails of the decision and what it might mean for pricing.
TBD on what this means for penny stocks, penny loafers, Alfred Pennyworth, and Penny Lane.
You can read more on all these stories for free when you click the links in our show notes.
